American Association of Franchisees and Dealers
The American Association of Franchisees and Dealers (AAFD) is a national non-profit group that protects consumers by exposing unethical practices in franchising and by educating the public about fair franchise rules and good opportunities. It argues that current laws don’t always stop abuse, and that even with disclosures, abuses can still happen. The AAFD provides resources to franchise associations, franchisees, owners, and potential buyers to help balance power and promote fair standards.
Key actions include the Franchisee Bill of Rights, adopted on June 6, 1996, which sets out the basic rights franchisees should have and helps promote fair treatment in the industry.
Franchise fraud is often viewed as a form of fraud or even a pyramid scheme by the FBI. The success of franchising has created a bargaining power gap: many contracts give no exclusive territory, allow franchisors to control locations, and restrict what a franchisee can do or continue after termination. Some agreements state the franchisee has no equity and that the business truly belongs to the franchisor, while offering little support from the franchisor.
Franchising in the United States is regulated by the FTC Franchise Rule, state laws, and industry guidelines. The latest widely cited version of the Rule (2007) explains what information a franchisor must disclose to someone considering a franchise opportunity.
Fraudulent practices sometimes include pressure to sign non-disclosure or confidentiality agreements, or gag orders that hide important facts about the business model.
In May 2024, the AAFD published a white paper on The New NLRB Joint Employer Rule, explaining how AAFD accreditation can reduce the joint-employer risks faced by franchisees.
This page was last edited on 2 February 2026, at 21:58 (CET).